Tuesday, June 10, 2014

"RadioShack Reports Financial Results for Period Ended May 3, 2014" $RSH

The Shack released results this morning:

  • Total net sales and operating revenues were $736.7 million, compared to $848.4 million last year. Comparable store sales were down 14% driven by traffic declines and soft performance in the mobility business.
  • Consolidated gross profit was $268.7 million, or 36.5% of net sales, compared with $340.9 million last year, or 40.2% of net sales. The decline in gross profit and gross margin rate was primarily driven by aggressive price competition in our current postpaid and prepaid handset offerings.
  • Consolidated selling, general and administrative (SG&A) expenses were $335.9 million, or 45.6% of net sales, compared with $333.7 million last year, or 39.3% of net sales. This represents a 6.3 percentage point increase as a percentage of net sales and operating revenues for the 13 weeks ended May 3, 2014, which was driven by declining sales volumes period over period.  The three months ended April 30, 2013, included a gain on the sale of a building of $2.4 million.
  • Operating loss for the first quarter was $81.0 million compared to operating loss of $10.3 million last year. On an adjusted basis, operating loss was $82.0 million excluding certain non-cash and one-time reserves on inventory and impairments of fixed assets.
Cash fell to $61.8 million on May 3 from $109.6 million on February 1. Quick ratio is now 0.5x from 0.6x the previous quarter.

Inventory was turned 0.93x during the quarter, or 3.7x annualized, which has fallen from a recent level of 4.3x inventory turns annually.

Amazing that they are doing store redesign capex with unsecured debt yielding 30%! I would be exchanging stock for the unsecured debt, which would really help to reduce the interest expense cash burn.

I just don't see how adding nautical flourishes to the stores is going to increase inventory turns, decrease SG&A expense, or help with interest expense.

1 comment:

MrGotham said...

The elephant in the room is the draw down on the credit line for $35MM as of June 9. What happened to the $61MM in cash as of May 3? Vendor credit issues perhaps?

They on the doorstep of a going concern opinion - from the 10Q:

"Our ability to maintain sufficient liquidity for the next 12 months to fund our operations and execute our strategic turnaround plan is contingent on improving the current trend in our operating results.

This plan anticipates that sales and gross margins will improve over the next 12 months in the mobility and retail areas of our business due to the initiatives detailed above."

Who wants to bet on improving sales and margins?